Renewable Energy first ever loan goes to Arizona

Dec 03, 2005

Agriculture Under Secretary for Rural Development Thomas Dorr has announced a $16 million loan guarantee to help finance construction of an electrical generating plant in rural Arizona that will use wildfire-damaged timber along with waste wood and paper fiber from a nearby paper mill as a fuel source.

The announcement marks the first time that USDA has made a loan guarantee through its Rural Development Renewable Energy and Energy Efficiency program.

“This project supports President Bush's comprehensive national energy policy,” said Dorr. “Renewable energy is a top priority for the nation and for USDA. As we expand generating capacity through projects like this one, we not only convert into electricity a fuel source that would otherwise go to waste, we broaden our energy options and through construction of this plant, provide a source of new jobs to Arizona.”

Rural Development funds will guarantee a $16 million loan to Snowflake White Mountain Power, LLC of Snowflake, Ariz. The company will build a 20-megawatt biomass electrical generating plant 17 miles from the community. The $23 million generating plant will use wildfire-damaged timber from the 450,000 acre Rodeo-Chediski fire, along with waste from the nearby Abitibi Paper Mill as a fuel source. The timber that was damaged by wildfire will be sold to the company under contracts with the U.S. Forest Service as part of its Healthy Forest Initiative.

Electricity generated by the plant will be sold to two Arizona utility companies, Salt River Project and Arizona Public Service. Each company will purchase 10 megawatts of power.

USDA Rural Development is providing a $10 million renewable energy systems loan guarantee along with a $6 million business and industry loan guarantee to fund the project. For the last several years, USDA Rural Development has provided renewable energy grants to selected applicants. In fiscal year 2005 alone, 154 grants totaling over $22 million were awarded under the program.

Final regulations establishing a loan guarantee component to the program were published in July 2005.

Renewable energy

“This loan guarantee is significant. Not only is it the first of what we expect will be many loans of its type, but loans made through this program will promote the development of renewable energy sources and provide energy efficiency improvements that contribute to the reduction of our dependence on foreign fuel,” said Dorr.

The renewable energy program provides grants and loans to eligible farmers, ranchers, and rural small businesses to assist in developing renewable energy systems and making energy improvements. Projects must be located in a rural area (any area other than cities or towns of greater than 50,000 population and the immediate or adjacent urbanized areas of the cities or towns). Eligible businesses include sole proprietorships, partnerships, corporations, and cooperatives organized in accordance with 501c(12) of the Internal Revenue Code. In addition, the applicant must meet the Small Business Administration's small business size standards.

USDA Rural Development's mission is to increase economic opportunity and improve the quality of life in rural communities. As a venture capital entity, Rural Development has invested over $54 billion since the beginning of the Bush administration to provide equity and technical assistance to finance and foster growth in homeownership, business development, and critical community and technology infrastructure. Over one million jobs have been created or saved through these investments.

Further information on rural programs is available at a local USDA Rural Development office or by visiting USDA's Web site at: http://www.rurdev.usda.gov.